Trading pace is slow and prices continue on the rise in BR

Cepea, August 20 2019 – Despite the crop period, crystal sugar prices (Icumsa up to 180) remained firm in the spot market of São Paulo State in the first fortnight of August. The average price level returned to 59 Reais per 50-kilo bag, reflecting the unwillingness of agents from refineries to lower asking prices. This scenario may be linked to the 2019/20 sugarcane crop, whose production mix has been prioritizing ethanol rather than sugar – the average prices in the current season (April/19 to July/19) have been higher than in the same period of the previous seasons, in real terms.

Liquidity, in turn, remained stable in the Brazilian market in the first half of August, with some occasional deals (for large volumes) closed. Between July 31 and August 15, the CEPEA/ESALQ Index for crystal sugar (São Paulo State) increased 2.2%, to 59.96 BRL (15.02 USD) per bag on August 15.

According to the 2019/20 crop production report from Unica (Brazilian Sugarcane Industry Association), sugar production in SP State between April/19 and July/19 totaled 9.193 million tons, 11.32% less than that from the same period last year (10.367 million tons). The production mix continues higher for ethanol, with 58.25% of the sugarcane crushed (179.505 million tons) allocated to the production of the biofuel.

INTERNATIONAL MARKET – In the long term, for the next 2019/20 global cycle, which starts in October/19, the Consulting company Green Pool revised up the estimates for the sugar global deficit to 3.67 million tons, due to lower production estimates for central-southern Brazil and India. The global deficit was previously estimated at 1.62 million tons.